We talked to Evan Shapiro while researching our May trend report, “10 Ways Marketers Are Using the Second Screen.” At the time, Shapiro headed up the IFC and Sundance television channels, where he steered both networks to new business and programming models and executive-produced films and series including the hit show Portlandia and the documentary This Film Is Not Yet Rated. Earlier this month Shapiro moved on to lead the television division of Participant Media, a company focused on creating socially relevant entertainment. Shapiro is also a professor of television management at NYU. He talked to us about the evolution of TV into a niche medium, how TV advertisers need to adapt and the new importance of audience conversations.

In a Huffington Post column earlier this year, you named some technological developments—streaming content, DVR, Twitter—as some of the most important things to happen to TV in the past five years. All of those initially had naysayers wringing their hands about how splintering audiences would hurt advertisers and networks. Why were they were wrong?

I probably was amongst the naysayers in a lot of these cases. The history of the television business has been littered with things that had unforeseen benefits to the business model. Look at the cable business: All this cable that was laid was just intended to deliver cable to the home. But what accidentally happened was, it created a network for broadband, which was a whole new product line for the cable operator, which then turned into a video delivery system that competed with the cable operator. Now it’s turning into a delivery system called TV Everywhere, which could be good for the cable operator.

So yeah, there is a lot of audience that’s moving some of the television to over-the-top streaming. But if you’re smart about new technology, your business can adapt and incorporate it. Twitter, DVR, streaming, all those things have been good for the television business. Netflix and Hulu and Amazon are now producing revenues for programmers like myself that were unforeseen five years ago. These are new dollars to the marketplace.

It seems that technology and networks are working together to create very engaged niche audiences that are very different to traditional audiences going back 50 years. How is IFC working to capitalize on those right now?

My entire thesis on television is that niche is new mass. If you look at 1972, All in the Family was the No. 1 show with 66 million people tuning in every Sunday night. And now that’s just not true. If you look at the top 10 shows, they don’t come up with that number combined. So you have to cater your programming to a smaller, yet more passionate group of consumers. And that’s because of technology. The first technology that really influenced that was cable, which created greater choice. Then DVRs and OTTs created niches, not just because of fragmentation by content grouping but also time [shifting].

There are exceptions: the Super Bowl, American Idol. There are going to be exceptions to those rules. But more and more, even broadcast television is becoming a niche brand unto itself. There are the big hits, but you look at shows like Community, which has this really fervent audience base, a small but very passionate audience.

So how can the second screen and social TV help networks capitalize on that fervor?

The more you can feed that passion with second-screen experiences, communal experiences, live complementary experiences, the more loyal that audience will wind up being. And what we’ve done [at IFC], we created second-screen experiences for almost all our shows called IFC Sync, where you have complementary content to what you’re watching live.

We do iTunes and Netflix, and a couple of other areas cater to that catch-up audience, that audience that perhaps didn’t get to see it live. And then really we allow the audience to drive a lot of the conversation. While we do control our own Twitter output, we don’t try to mandate a curative experience over Twitter or even on Facebook. We really do allow the consumers to drive a tremendous amount of the conversation.

What we’ve seen is that that actually feeds back into a very fervent live audience. Our audience for Portlandia is really passionate. We do very well live, but really in those first three days from the live airing, we are seeing the vast majority of the viewership coming to the show right there.

Does the audience’s passion for Portlandia transfer to sponsoring brands? Or are they simply basking in the show’s reflected glory?

Subaru actually appeared in a sketch inside Portlandia. The car itself was not sold in an overtly commercial way, it was just in a sketch that had to do with cars. And what I noticed afterwards is that people really noticed that there were Subarus in the sketch, and then, secondarily, they said, “Oh, that’s a really good brand for Portlandia.”

Here is a brand that was brave enough to be in a sketch on Portlandia, which is a pretty irreverent show. There is a bit of courage that goes along with doing something like that. They were giving the conversation about their brand over to the artists and consumers. And I think smart, nimble, courageous brands that believe in their value proposition and the relationship they have with the end user will be able to do more than just bask in the glory, they will be able to participate in the conversation.

Those that are a little more worried about letting the world talk about them without them controlling the conversation—I don’t think they’re going to be able to participate in branded content in the same way. As DVRs and all these other things take a deeper root in the marketplace, I think branded content is going to be a continually important part of the conversation. And those brands that are ready to go with it are going to benefit from that. Secondarily, what I’ve learned is that commercials can be branded content too. Look at what Doritos has been able to do with their user-generated commercials.

It’s not enough to make one commercial and hope that works on every channel anymore. I think you need to be smart enough to make spots that actually fit in the environment where you’re placing it. So there should be a different commercial that airs inside Portlandia than the one that airs inside Glee—those are two different audiences.

One of the reasons our breaks do so well inside Portlandia is we are very careful about the commercials we put in there. We curate our breaks incredibly carefully. It’s not only about doing branded content inside the shows or making specific things, it’s curating your channel so that it’s just more watchable.

How are the big broadcast networks responding to this new niche environment? Can they afford to curate and to do niche?

I think they can handle it. I think that other than CBS, all the broadcast networks are niche networks—take out American Idol, take out Modern Family and take out CBS. Thursday night on NBC is a cable network. It caters to a very specific upscale, smart, young audience. Look at New Girl, which is a very good show, does pretty decent numbers, but it’s not All in the Family, it’s not Seinfeld. It’s catering to a very specific audience. So I think [the broadcast networks] are moving that way. They teeter between fighting that trend and accepting that trend.

I think that they can [change], and I think that they will. They don’t have a choice. You’re going to have to program for the kind of niche audience and curative experience that audiences have come to expect.

Hulu has this thing called ad swaps, where you get to choose what commercial you watch. That’s the competition right now. We have to adapt, or we will die. We have the largest generation in the history of the world graduating from college now and through the next five to 10 years. They are going to singlehandedly change the way media is consumed. They already have, but their influence is only going to pick up steam over the next five years.

Do you think audiences will splinter further, become even more niche?

I don’t. I think we are near the critical mass of fragmentation. What you’re seeing happen is that the second-screen experiences are causing greater attention to live viewing than even 18 months ago. Twitter is now a communal viewing experience that forces people to certain shows live because they don’t want to be outside the conversation. So I think you’re going to see the pendulum begin to swing a bit the other way and then actually pick up steam, because things like Facebook and Twitter and Foursquare and GetGlue prove that people want to share experiences—they really, really do.

I don’t know how much more fragmented the world could possibly get. Watching a television show made specifically for you, that can be the way it goes, but I think society is proving that that’s not actually what people want. They want to share that heartbreaking moment with other people.

We have seen producers and actors and networks getting involved in those second-screen conversations. Do you think the next step for brands is to join the conversation?

The issue with content created by brands is that it has to sell the content along with the brand. A lot of brands make the mistake of saying, “Let’s just invent a character and have that person talk to the audience.” I don’t know that that’s always going to work, unless you have a very compelling character.

But if you look at what Wieden+Kennedy was able to do with Old Spice in creating a personality that people gravitated to, yeah, I think that is where we are headed. We’re going to have personalities owned by brands who are part of the cultural conversation, as long as they are organic and as long as there is an authenticity to that personality.

Do you think there is a bubble around social TV and second-screen apps? Are there any that you think will come to dominate? 

The world only needs so many main streets, so I don’t think there’ll be an infinite number of social television apps out there. Rather than invent our own, we are using existing social networks to create a conversation, mostly because you fish where the fish are.

So I don’t see Facebook ever being replaced, and I believe that that’s going to be one of the more important second-screen experiences for television—and may eventually become a program outlet itself. Twitter is an enormously powerful tool; I don’t see its importance dissipating in the near future.

What marketing experiments have you seen recently that have blown you away? 

I’m enjoying the way people are using iPad advertising—to me that’s one of the great pieces of unexplored earth on the planet.

Can you give me an example?

The Mad Men campaign on the New York Times app. There is a lot of good stuff happening, but I don’t think people are experimenting enough. There is one ad per page, typically, with infinite expandability on that page. So go ahead and telescope an ad infinitely. For example, there is little video in these ads, even though it’s completely capable of running video. There have been some very interesting experiments in that space, but I think it can get far more progressive than has already been done.

As far as television advertising goes, I think the stuff Farmers Insurance is doing right now is really inventive and funny, and I actually stop on those commercials because I want to see the continuing story. Doritos is doing some amazing stuff with regard to giving their brand to very young, fresh voices, and again when I see a Doritos commercial I stop my DVR and I watch it.

There are a lot of young creative minds and diverse voices, which are not necessarily given the same type of advantage given to people who have traditionally been doing creative. I work in an organization called The Ghetto Film School, which takes kids from the inner city here in New York and teaches them how to make television and film. We opened a high school for film and television called The Cinema School in the South Bronx a couple of years ago. A lot of these kids never would have thought of going into the video, television and film business but for this organization. It’s time to give a more diverse set of minds and voices an opportunity to speak up in the marketplace, and I think that’s something the media business doesn’t do a very good job of, actually.

Now that there’s a splintering of the audience, maybe there’s more room for those voices?

I would hope so. The current generation that’s 13 to 30 is the most diverse, most open-minded generation in the history of the world. And they strive for the new and the different on a daily basis. And in order to compete, you have to cater to that desire. I don’t think our industry always is great at that. I would specifically say the advertising business has a long way to go with regard to that.